Autumn Statement 2012

December 19, 2012 1:43 PM

The Liberal Democrats are committed to building a stronger and fairer society. This has been reflected in the government's Autumn Statement which has taken the tough but fair decisions needed to tackle the economic situation we inherited after the worst financial crisis in generations. We're attempting to rebuild the economy in the fairest way possible by making sure that the rich pay their share and the poor aren't unduly squeezed whilst also bringing the cost of our welfare system under control and cutting Whitehall waste.

What have we done?

The Coalition government has been responsible for cutting income tax for every ordinary worker in Britain, cutting the deficit by a quarter, creating over one million private sector jobs, and maintaining low interest rates, which have benefitted thousands of families across the UK. We have been part of one of the biggest crack-downs on tax avoidance schemes in recent history including on large companies and businesses and wealthy individuals - believing that the only way we can all get through this crisis is if the burden is fairly shared.

The Autumn Statement 2012 has delivered an ambitious plan for structural reforms to our weakened economy - to reduce the deficit, restore stability and rebalance the economy. The Liberal Democrat guiding principle in all of this is fairness; and in all of this we have pushed to keep this value at the centre of everything we have done as part of the coalition government.

How will the changes affect you and make your life easier?

Income Tax: Many lower paid workers will be paying less income tax - with a £235 increase in personal allowance in April 2013 bringing it up to £9440, taking 2.2 million people out of tax. The slice of income to be taxed at 20% has also been scaled back, to £32,010. In Sutton this means that 7,230 people will no longer be paying any income tax and 87,700 will be paying around £600 less.

Pensions: The basic state pension will rise by 2.5% next year to £110.15 a week, in line with our commitment to the triple lock - this is the biggest rise in pensions in over 60 years. The limits on tax relief for pension saving are also being reduced, again.

Fuel duty: The scheduled fuel duty has been cancelled saving motorists (and businesses) an estimated £5 every time they fill up compared to Labour's plans.

A functioning welfare system: In order to create the appropriate incentives to work, the government will uprate most working age benefits and tax credits (excluding disability and carers's benefits) by 1% for three years. Controlling the cost of the welfare system in a way, which rewards hard work rather than through the marginalization of particular groups.

Making sure the rich pay their fair share

Tax avoidance: Recent agreements with Switzerland and the US will raise over £5 billion over the next 6 years. We've also created a special unit at HMRC, with a budget of £77 million, to fight tax avoidance by wealthy individuals and multinationals which is expected to raise over £2 billion a year.

Stamp Duty: On homes worth over £2 million, Stamp Duty has been increased significantly and an annual charge on homes over £2 million bought in company names has been introduced.

What about wider changes?

Infrastructure: A £5.5 billion package, which includes support for long-term private investment for new roads, schools and scientific development.

Fostering the UK's competitiveness: A further 1% cut in main corporation tax will come into place by April 2014, and an Additional Investment Allowance will temporarily increase from £25,000 to £250,000. This means cutting tax for businesses that invest.

Supporting UK businesses: We have made available finance and support by creating a Business bank and facilitating the provision of up to £1.5 billion in loans, helping small business.

The widespread damage inherited by this government from the financial crisis, Labour's bad handling of the economy and the continuing crisis in Europe has meant that the benefits of our plans are taking longer than expected to come into effect. But this government remains committed to what it believes is the right plan for the UK which are slowly but surely rebuilding our economy.